Swing and a miss—strike two for interest rates boosting Greater Toronto real estate demand. Toronto Regional Real Estate Board (TRREB) data shows home prices slipped lower in July. Despite a narrative of rapid population growth, demand remains historically weak as sellers appear in near record high volumes for the month, only to find one of the weakest buyer turnouts.
Greater Toronto Real Estate Prices Have Stalled For 3 Years
The benchmark price of a typical home across Greater Toronto.
Source: CREA; TRREB; Better Dwelling.
Greater Toronto once again saw real estate prices slip lower. The price of a benchmark home fell 1.2% (-$13,300) to $1,097,300 in July. That puts the price of a typical home 5.0% (-$57,100) lower than last year, and 17% (-$224,700) below the record high reached in March 2022. Home prices are roughly the same as they were back in October 2021, stagnating for nearly 3 years.
Greater Toronto Real Estate Price Declines Are Accelerating
The annual rate of change for a composite benchmark home across Greater Toronto.
Source: CREA; TRREB; Better Dwelling.
Real estate investors were hoping that home prices would get a boost from lower rates, but the trend appears to be moving in the opposite direction. Annual growth is moving deeper into negative territory—good news for buyers, bad news for sellers.
Toronto Real Estate Sales Remain Weak While Inventory Pops Much Higher
Weak demand is a large part of the issue, especially when contrasted with the sudden surge of inventory. There were 5,391 existing homes sold in July, a 3.3% increase compared to a year prior. It’s growth, but not much—that made the third weakest July in well over a decade of data. Only 2022 and 2023 were weaker in recent history, showing some progress but things are far from normal.
At the same time, a lot of sellers have been hitting the market. New listings climbed 18.5% higher from last year to hit 16,296 homes in July. It was the biggest increase for the month since 2020.
The surge of new inventory helped to produce one of the weakest demand balances on record for July. The sales to new listings ratio (SNLR) fell to just 33%, a level never before seen in the month. The level is well below where the demand is considered oversupplied, where the industry expects prices to fall.
Toronto Real Estate Inventory Hits Highest Level Since 2010
Greater Toronto active listings for the month of July.
Source: TRREB; Better Dwelling.
Speaking of inventory, it’s not just new supply—a lack of sales is allowing inventory to accumulate. Active listings at month-end saw annual growth of 55.4% to 23,877 units in July. An unusually lofty number for the month—the most homes since 2008.
Greater Toronto real estate is facing historically weak demand, though prices haven’t budged much from last year. The tight consolidation of the price range shows the market is uncertain of which way demand will head, and it’s easy to see why.
On one hand, the real estate industry is calling for higher demand in response to lower rates, the same factor that pushed the market much higher. Add to that a region that is traditionally the recipient of much of Canada’s fast growing population.
On the other, investors aren’t seeing the easy money they once did. Much of the inventory being sold is from investors looking to lighten their position. At the same time, new condo investors are finding out the returns are nowhere close to what was expected, while rental vacancies surge higher. The narrative and data are at odds with each other, and it won’t be clear for another few months which is correct.
